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Dropshipping is an element of retail fulfillment practice in the standard retail model that allows a store selling products and merchandise to not hold its own inventory or, in other words, do away with keeping their products in stock, or shipping their products to their customers on their own or owning a warehouse to store its products.

In this case, whenever there is an order for the product, the seller purchases its item from a third-party vendor and this third-party vendor ships it directly to the customer. This retailer partner with a dropship supplier that does the manufacturing, warehousing, packaging, and shipping of these products, on the retailer's behalf. The merchant does not see or handles the said product.

There are plenty of benefits to this dropshipping business model. These are:

It is extremely easy to set up. Unlike setting up a brick-and-mortar business space, this retail model only involves just three steps which is i) finding the supplier ii) setting up a good website and once that is done iii) selling your products and services

This model is easy to understand and implement especially for a new coming into the e-commerce industry

To set up your business with the dropship model, the cost involved is literally next to nothing. Unlike in traditional business models where the major costs go into the setting and running of the operations, in dropshipping this step is eliminated and all the cost you need to think of is the applications you need to run your website, domain registration, hosting as well as themes you use - which is not much.

There are no unreasonably high overhead costs involved. The merchant or business owner can do away with renting or buying warehouses to store their products and also do away with utility bills that come with it. The costs of managing the website are they need to worry about.

Dropshipping risks are significantly lower because there is little to no pressure about selling inventory.

This type of business model can be run from anyvvhere meaning the business owner or merchant's location independent. There is no warehouse, no sales location, no offices, not much employees and no hassles.

There is little to absolutely no commitment to a physical space requirement which means the business owner can run their business by the beach, in their home, while flying on the plane. All you need is an internet connection and your laptop, iPad, tablet or any device you can access the internet with.

You can sell just about anything over the internet and there's a dropship supplier for almost anything out there. Either sell only one product, or a mix of products - it is entirely up to you. Just find your niche and the right dropship supplier you need.

You will have more time and resources to look into scaling your business. With traditional business models, the more you profit, the more work you have to put in and the more you need to invest in the resource section. Of course, even with the dropshipping model, you need to put in some investment but not to a huge amount. Dropshipping enables you to send more orders to your supplier, from here on you let them handle everything else while all you need to do is earn profits.

Dropshipping also reduces losses on damaged goods. Shipment is directly from supplier to customer and because there are fewer shipment steps involved, the risk of the items being damaged is also reduced.

Where there are pros, there are also cons even when it comes to dropshipping. Here are some of them:

You will receive slightly lower profit margins compared to sourcing from a manufacturer or a wholesaler. Dropship suppliers will charge you higher prices depending on your niche, requirements, and location and this will cut into your profit margins.

You must bear complete liability if anything goes wrong, even if it is the supplier's fault. The customer purchases the product from your site- the merchant's website. In the event, something happens or if the supplier doesn't keep their end of the bargain or messes up, it is still the merchant's fault. Your customers will contact you because you are the face of the brand. Therefore, it is extremely important to hire the right dropship supplier.

You have lower control over the creative process. Your customers will have lesser satisfaction with your product because you will not be able to determine personalized packaging or the branding of the shipped products- this is dependent on the supplier. You have less control over how your product is presented during the fulfillment and delivery process as this is the supplier's job to ship the products to the customers. However, having the right supplier and establishing a good relationship with them will give you better control as some suppliers will go the extra mile in ensuring your creative process is delivered through the product. However, this may cost more.

There may be more issues especially when it comes to shipping. Selling multiple products is a good idea as it can increase sales and make you profit, however, it can also pose a problem if the merchant has too many suppliers to deal with for each product they sell. Also, different suppliers will change different shipping costs as this would depend on where they are located and what kind of product you have.

The competition in dropshipping retail is extremely high due to the attractiveness and the popularity of this business model. Unless the merchant caters to an extremely specific niche, the competition is detrimental.

It is hard to keep track of the inventory from the supplier. Due to miscommunications due to cancellations and having backorders. However, with new software coming in and improved communication abilities, this matter can be solved. Of course, this software also comes with a price and may also increase your overhead costs.

Profit margins for dropshipping usually range from 15% to 45%. For consumer goods such as luxury items and durables, the profit margin can be up to 100%. When it comes to dropshipping, it entirely depends on the kind of niche you are in and then getting the right supplier. You do not want to enter a heavily saturated market.

More you can read in the book DROPSHIPPING FOR BEGINNERS

Address Verification System (AVS): Built to fight payment card fraud, the payment card Address Verification System compares the billing address a user submits during a card-not-present transaction with the billing address on record. AVS is onc of scvcral payment card fraud prevention systems.

Affiliate: A publisher or site owner that forwards qualified web traffic to an online merchant on a pay-for-performance basis is called an affiliate in the context of online marketing.

Affiliate Links: A universal (uniform) resource locator (URL) that includes an affiliate´s identification number and additional information that makes it easier for merchants to track affiliate activity is an affiliate link.

Amazon: In the retail context, Amamn is a multi-narional online retailer with a market capitalization in excess of $128 billion U.S. as of January 2013. Amazon also hosts a ma rketplace wherein Other Internet purveyors may display and sell products, and offers several software-as-a-service and solutions for business.

Application Programming Interface (API): An API is a protocol created to allow separate software solutions to communicate over a relatively simple interface. Developers will often use APIs to connect or integrate systems and services.

Authorization: A payment card transaction performed specifically to determine if the payment account has sufficient funds to complete a given transaction.

Authorized Distributor: A manufacturer-approved or -designated distributor able to sell products in quantity to commercial customers like Internet retailers.

Authorized Retailer: A manufacturer-approved or -designated retailer able to sell products directly to consumers.

Better Business Bureau: A non-profit organization in Canada and the United States that is focused on trust in advertising. The organization responds to consumer inquiries about business reliability, and accredits businesses. Accredited online merchants may display a Better Business Bureau badge.

Bing: Microsoft's search engine, Bing, displays results in response to a user's search query. The site uses a complex and secret algorithm to select which sites to display in response to a particular search. Bing also offers a pay-per-click adw•rtising platform, and allows merchants to offer a discount to shoppers.

Blog: A blog is an online journal or publication that includes relatively short, discrete articles, called posts, that are typically organized by date with the most recent posts first. Frequently, blogs allow readers to add comments to posts. The term blog is a combination of "web" and "log." At first, blogs tended to be personal journals or opinion sites, but the term has comc to include an array of different types of publications. In the ecommerce context, blogs are frequently used as a marketing tool, and may be included in a merchant's social media or content marketing campaigns.

Bootstrapping: In busi ness, bootstrapping is the concept of self-fundi ng a new company, meaning that a business pays its operating expenses either with profits or from its founder's own investments, rather than accepting external capital.

Bounce Rate: An Internet marketi ng term used to describe the percentage of site visitors that arrive at a single page on a given website, and then leave (bounce•) from that same page without visiting any other page on the site.

Brick & Click Store: A retail outlet or business with at least onc physical location and at least one ecommerce enabled website.

Brick & Mortar Store: A retail outlet or business with at least one physical location.

Business Structure: A company's legal status or organization. Often refers to incorporation.

Call-to-Action: A phrase, button, link or Other site element that specifically asks a visitor to take some action, including purchasing a product, registering. subscribing or similar.

Canonicalization: The practice of selecting preferred URLs for a specific set Of content. Many modern sites allow content to be accessed from a number of URLs, including URLs that may contain session or query information. Canonicalization helps to manage which Of those URLs search engines index and credit.

Canonical URL: The canonical meta tag that directs search engines to index the preferred URL for site content that is available from multiple URLs.

Capture: The process of securing payments from a payment process after an authorization.

Chargeback: When an issuing back forcibly reverses a transaction, taking funds from a merchant and returning those funds to a consumer. Nearly all chargebacks are the result of a consumer complaint, including claims that the transaction was not authorized, not fulfilled, or not as described. Chargebacks may also affect the rate that merchants pay to process card- not-present transactions.

Comma Separated Values (CSV): A file type that stores data values. CSV files are often used to transfer product feeds.

Confirmed Shipping Address: The phrase confirmed shipping address may have two similar but distinct meanings in the ecommerce Context. Confirmed Shipping Address may simply be an address that actually exists based on a review from a package carrier like FedEx or the United States Postal Service. The phrase may also refer to a shipping address that a particular consumer has either registered with a payment processor or used successfully in a prior transaction with a particular merchant.

Content Management System (CMS): A software solution that makes it possible to create, edit, maintain, publish, and display content on the Internet from a single interface or administration tool. In the online retailing context, a CMS may be used to manage a stores product.

Conversion: A marketing term that describes When a user or visitor completes some acticm or achieves some marketing goal. More specifically, conversion is often used to describe when a site visitor converts to a custorner, making a purchase.

Cookie: A small file saved on a user's computer or mobile device for the purpose Of storing information related to the user's interaction With a particular site.

Corporation: A distinct legal entity and business structure, wherein the business is separate from its shareholders.

Customer Relationship Management (CRM): A software solution specifically devoted to organizing, synchronizing, and automating a business' customer relationships.

CSS: A stylesheet language used to describe the "100k and feel" Of a site written in HTML CASS allows a page's presentation to be separated from its structure, making updates and maintenance easier. CSS stands for Cascading Style Sheet.

Delivery Confirmation (DC): A service offered by many package carriers, like the United States Postal Service and FedEx, that provides the shipper with information about when a package was delivered. This is not the same as when a customer signs for a package.

Directories: Sites that list and link to other sites, including online stores, are referred to as directories. conducted on the Google search engine to suggest keywords for a given URL and category.

Google Trends: A search engine tool that shows how often a particular term or keyword is searched for on Google. Results are shown in a relative scale, making the tool well suited for comparing keywords or phrases, Trends will also show where searches came from and how search volume for a particular keyword has changed over time.

HTML (Hyper Text Markup Language): A markup language specifically created for displaying web pages and applications in web browsers. Like other markup languages, HTML annotates a document, describing its layout and syntax.

Inventory: The value or quantity of a retailer's current stock of products.

JavaScript: A scripting language—ECMA script—used to make web pages interactive and dynamic.

Landing Pages: In the online marketing context, a landing page is a single web page that is displayed in response to a particular call to action. Landing pages are often shown in response to a link in a pay-per-click ad, a link in an email, or a specific URL shown in offline advertising. Landing pages include content meant to meet the expectation se•t with the link a visitor clicked.

Limited Liability Company (LLC): A business structure that blends some of the best elements of a partnership and a corporation.

Linking Root Domains: In search engine optimization, when site A links to site B one or morc times, sitc A is said to bea linking root domain.

Linking root domains — in the plural — are the total number Of unique sites that link one or more times to a given website.

Liquidation: A sale intended to dispose of all of a given product line's inventory With the intention Of not replenishing supplies.

Liquidator: A company that purchases closeout products for the purpose Of resale.

Listing Fees: Marketplaces and online auction sites, like eBay, may charge a nominal listing fee for posting products.

Logistics: The management of products or other resources as they travel between a point oforigin and a destination. In ecommerce, logistics might describe the process of transporting inventory to a merchant or the act of shipping orders to customers.

Long Tail: Posited in the October 2004 istle ofW1red Magazine, the Long Tail is Chris Anderson's idea that markets and marketplaces, especially online, are moving away from mainstream, broad-appeal products toward niche products. In ecommerce, new retailers may find it easier and more cost effective to focus on niche products. Long-Tail Variations: In search engine optimization and pay-per-click advertising,

Long-Tail variations are keywords similar in meaning or root to Other high-volume keywords, but less competitive. Long-Ta variations are often employed when a business is just starting out and cannot gain traction or afford to bid on top performing keywords.

Long-Tail Traffic: Website traffc derived from Long-Tail variation keywords or from niche searches and keywords in general.

Manufacturer: A company that makes goods for the purpose of sale.

Manufacturer's Suggested Retail Price (MSRP): The price at which a manufacturer recommends that retailers sell a given product.

MAP Pricing: Manufacturers may require retailers to sell or advertise a given productata minimum price. This price floor is known as a minimum advertised price or a minimum acceptable price. Manufacturers vary in their MAP enforcement, with some cancelling retail dealer agreements, if sellers offer products below MAP.

Margins: The difference between what a retailer pays for a product and What the retailer's customer pays for the product. Margin calculations may consider only the cost of the sold or may take into account overhead and other variable costs.

Meta Tags: HTML tags that provide information about a web page, but do not necessarily impact how a page is displayed. Meta tag infor mation is useful in search engine optimization and fc:r use with some urtal media application programming interfaces.

Minimum Order Size: Manufacturers or distributors may require retailers to place orders that meet a minimum value or unit count. This requirement would bc the minimum order size.

Multi-Channel Retailing: Retailing products through more than one channel where channels include cmline stores, online marketplaces like Amazon, physical stores, physical catalogs, arul similar.

Multivariate Testing: In online marketing, a testing model that has marketers simultaneously test many variables in order to discover which variation in web page or ad content or design produces the best pcxssible result. Simply put, prospects might see one ofscveral variations of a page or online ad, while marketers measure which variation did the best job of achieving some stated goal, like making a sale.

Net Profit: The difference between a business' revenue and its costs—all Of its costs. Net profit may be thought Of as the money left over after every bill is paid.

Net Terms: Credit term that a supplier extends to a retailer, allowing the retailer to pay for purchased items some number of days after those items have been shipped. Often net terms are described as "net 30," "net 120," or similar whcrc net 30 means that a retailer has 30 days to pay for an order after that order has shipped. Frequently, net terms Will also include a discount so that 5/10 net 30 would mean that a retailer would receive a 5-pcrcent discount if the bill was paid in 10 days or less, otherwise the bill is due in 30 days.

Niche: A distinct market segment.

Open Site Explorer: A SEOmoz link analysis tool created to help measure several aspects of a site search optimization and link quality.

Order Fulfillment: In ecommerce, order fulfillment is the process of completing an order, shipping a product or products to the customer. The term may also be applied to logistics companies that inventory products and ship orders on behalf of an online store.

Organic: In the context of search engine optimization and search engine marketing, organic results are those listings search engi nes show because of their relevance to a query, not because a site owner paid for an ad or paid to be featured.

Outsource: The process of contracting work to external, third-party organi zations.

Overhead: The ongoing expenses associated with operating a business.

Quantitative Metrics: In online marketing, quantitative metrics are those measures that may be represented as numbers. Click-through rates, visitor counts, and time-on-site are all examples of quantitative metrics.

Qualitative Metrics: In online marketing, qualitative metrics seek to measure the quality of a customer interaction, and may be subjective in nature. A retailer, as an example, may implement a new product review campaign, compare reviews written beforc and after the campaign, awarding each review a qualitative score, and then use the relative scored to decide if the campaign was successful.

Reseller: A company that purchases goods or services for the Of resale not consumption. In web economics, a reseller may also be a form Of affiliate marketer, promoting a rebranded service.

Restocking Fees: A fee charged to customers who are returning products. Often the restocking fee is subtracted from the customer's refund.

Retailer: A company that sells directly to the end consumer.

Search Engine Marketing (SEM): Online marketing aimed at increasing a given website's visibility on a search engine results page (SERP) by both optimizing the website for indexing and purchasing ads or paid inclusions.

Search Engine Optimization (SEO): The prcxess of making a website easier for search engine bots to index and categorize.

Search Engine Results Page (SERP): A search engine web page displaying the list of responses to a particular search query.

Shipping: The procrss Of physically moving merchandise form a point of origin, like a retailer's warehouse, to a destination, like a customer's home.

Social Media: Internet-based tools or websites that facilitate sharing of content, opinions, links, images, or Videos between people.

Social Media Marketing: A branch of Internet marketing aimed at promoting products or service via scrial media. It may be thought of as web-based word-of-mouth marketing.

Sole Proprietorship: A business structure wherein a single individual both owns and runs the company. For the most part, there is not legal distinction between the owner and the business.

Split Testing: In online marketing, a testing model that has marketers simultaneously test two variables (Often labeled A and B) in order to discover which variation in web page or ad content or design produces the best possible result.

Supply Chain: A network or system of businesses involved in moving a product from its manufacturing point to the custorner. In online retailing, the supply chain usually represents the distributor and manufacturer of a product.

Tracking Number: An alphanumeric identification that shipping services like FedEx or the United States Postal Service assign to a specific package to facilitate monitoring and dclivcry confirmation.

Trademark: Government protection for words, symbols, or designs meant to represent a product or brand.

Trade Show: An exhibition created so that manufacturers and distributors may show or demonstrate new products or services.

Traffic: In Internet marketing, traffic represents the number Of visitors a particular page or site receives.




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